Gary awaits casino license OK

The state rewarded Gary with two casino licenses, and its leaders put that money to use for major building renovations, the construction of a minor league baseball stadium, and eventually to supplement its regular operations.

Now much of that cash is frozen, and Gary is once again at a crossroads. Without help from a state tax appeals board, its $63 million budget could be cut by at least half in the next two years. Don Barden, owner of Gary's Majestic Star Casinos, has money troubles of his own.

It isn't clear if Barden wants to sell his boats, but one state lawmaker from Gary warns that powerful politicians want to move one of his casinos out of the city.

Other elected leaders, like City Councilman Roy Pratt, can't help but think of the possible boon to Gary if Barden cashed in his chips.

"It could be a magnificent thing,"?Pratt said.

Falling out

It wasn't long after Mayor Rudy Clay took office in 2006 that relations between Barden and the city soured.

Barden's casino licenses were subject to renewal by the Indiana Gaming Commission in 2007, and Pratt mounted a public campaign to rescind one or both.

Weeks after a public shouting match between Pratt and Barden in the Gary City Council chamber, the commission gave Barden permission to keep his boats.

At the same time, though, Clay's attorneys were quietly negotiating with Barden over an agreement he signed with former Mayor Scott King. That deal lowered Barden's financial commitment to the city by 1 percent of his adjusted gross revenue, but it also gave the city extra time to build an access road to his property from Cline Avenue.

Hamilton Carmouche, Gary's corporation counsel, says that agreement is void because it wasn't approved by the city's Board of Public Works and Safety.

With negotiations stalled and licenses safely in hand, Barden joined with state Sen. Robert Meeks, R-LaGrange, to move one of his licenses to Steuben County.

That bill soon died in committee, though, allegedly prompting Barden to warn Gary officials of the consequences.

According to court documents, "Barden angrily told the city's representatives that the city would not be receiving any more money from Majestic I or Majestic II."

Just weeks later, Barden filed a lawsuit against the city for breach of contract. He complained that the city never built the road to his property, and he began depositing the monthly payments owed to the city in an escrow account.

When Gary's already difficult budget problems spiraled out of control last year, Barden released $4.4 million of the $6 million he owed the city for 2008. Otherwise, Carmouche said, the case is lingering in Marion County courts with no date set for a final hearing.

Gaming in Fort Wayne?

State Rep. Charlie Brown, D-Gary, said last year's effort to relocate Barden's license to Steuben County failed because of sudden interest by Allen County.

With Meeks in retirement, Brown said, Allen County's path to the license could be clear.

"Something is going to give this session," Brown said.

Ozzie Mitson, Fort Wayne's legislative and business liaison, said the concept is under review.

"We've been approached by various groups about bringing gaming to Fort Wayne," Mitson said.

While not ruling it out, Mitson said he doesn't expect state lawmakers to vote on any proposals during this legislative session.

"We're still doing our homework," Mitson said.

Ed Feigenbaum, editor of Indiana Gaming Insight, said a referendum vote by the residents of Fort Wayne would have to follow any action by the General Assembly.

"That's not a guarantee of anything," Feigenbaum said.

Sen. Earline Rogers, D-Gary, said her conversations with Allen County officials indicate they want Gary to work out its troubles with Barden before any transfer takes place.

"Then whatever they worked out would be received positively by the legislature,"?Rogers said.

Also, if Fort Wayne wants to draw a license away from Gary, Brown said he would insist on provisions to make up for the lost casino cash at City Hall.

"We still don't want to lose revenue," Brown said.

Either way, Rogers said, state lawmakers are in a "hunt for dollars" this year. Some believe Barden's boats would perform better and produce more revenue for the state if they weren't docked side-by-side.

"The lackluster performance of Majestic Star might be of some concern and interest,"?Rogers said.

Ready for a sale

Even without movement in Indianapolis, speculation has gone on for more than a year about whether Barden wants to sell his Gary boats.

A Chicago-based billionaire took over Barden's Majestic Star Casino project in Pittsburgh last year, and a short time later Barden's company hired a financial adviser to help consider its options, including a possible sale of its assets.

Just this month, Clay told a tax appeals board in Indianapolis that both of Barden's boats are for sale, and he repeated the statement at a City Council meeting days later.

Reached briefly while boarding a plane this week, Barden was asked if he was truly trying to sell his boats.

"That's not true," Barden said.

Upon hearing of Barden's denial, Clay declined to comment any further.

"It's highly possible I misunderstood what he said," Clay said.

Ernest Yelton, executive director of the Indiana Gaming Commission, said his office hasn't been notified of any pending sale. Frozen credit markets, meanwhile, could seriously hinder any deal, Feigenbaum said.

Pratt, still a regular critic of Barden at City Council meetings, is preparing himself just in case. A new license holder, Pratt said, would mean the city could negotiate a new development agreement and increase cash flow at City Hall.

"We'd have jobs, and we'd have money," Pratt said.

Pratt also points a finger at the Gaming Commission for failing to label Barden as financially unsuitable to hold a license.

Yelton said financial suitability is a factor when the Gaming Commission decides whether to renew a license. At the renewal meeting in 2007, the commission took the unusual step of asking Barden for quarterly financial reports.

"We are in contact with him," Yelton said.